Murtagh & Anor v Taylor [2004] NSWADT 271

CITATION: Murtagh & Anor v Taylor [2004] NSWADT 271 DIVISION: Equal Opportunity Division FIRST APPLICANT Tina Murtagh PARTIES: SECOND APPLICANT Darren Fensom RESPONDENT Teresa Taylor FILE NUMBER: 041058 HEARING DATES: 28/09/2004 SUBMISSIONS CLOSED: 09/28/2004 DATE OF DECISION: 11/30/2004

BEFORE: Behrendt L - Judicial Member; Lowe A - Non Judicial Member; Schembri A - Non Judicial Member APPLICATION: Age Discrimination - Accommodation MATTER FOR DECISION: Principal matter Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Anti-Discrimination Act 1977 Property, Stock and Business Agents Regulation 2003 Caton v Richmond Club Ltd [2003] NSWADT 202 D v Berkeley Challenge Pty Ltd [2001] NSWADT 92 CASES CITED: Dee v Commissioner of Police and Anor (No.2) [2004] NSWADT 168 Samuels Real Estate v Lamb [1998] EOC ¶92-923. Shellharbour Golf Course v Wheeler [1999] NSWSC 224 FIRST AND SECOND APPLICANTS REPRESENTATION: D Hillard & A Davis, solicitors RESPONDENT G Casey, solicitor ORDERS: The Applicants claim of Respondent's vicarious liability for the age discrimination complained of is dismissed.

REASONS FOR DECISION 1 The applicants, Ms Murtagh and Mr Fensom, are a de facto couple with six children. In the period between May and June 2003 they were looking for a house to rent in Young. 2 The applicant's children are relatives of the Applicant for the purposes of the Anti-Discrimination Act 1977. They are persons wholly or mainly dependent on Ms Murtagh and Mr Fensom and are members of their household. 3 The respondent, Ms Taylor, was the owner of a four bedroom rental property in Young. Ms Taylor had employed an agent, John R. Barton Pty Ltd, to secure tenants for the property. The Evidence 4 Ms Murtagh had applied to John R. Barton Pty Ltd to rent the property on or about 6 May 2003. Mr Barton advised her that the owner had recently renovated the house and did not want to rent it to a family with children or pets. 5 On 4 June 2003 Ms Murtagh again asked if she could apply to rent the property after seeing it in the window. The agent again told her that the owner of the property did not want to rent to a family with children or pets. 6 On 11 June 2003 Ms Murtagh approached Mr Barton about renting the property. Mr Barton and another staff member both informed Ms Murtagh that the owner did not want to rent the property to a family with children. 7 On 28 June 2003, another agent engaged by Ms Taylor rented the property to another tenant. 8 On 29 June both Ms Murtagh and Mr Fensom spoke to the agent about renting the property. 9 On 30 June 2003 Ms Murtagh and Mr Fensom lodged a complaint with the Anti-Discrimination Board. 10 In his letter to the Anti-Discrimination Board dated 28 August 2003, Mr Barton stated that he had verbal instructions from Ms Taylor that, due to recent renovations to the property, she did not want to rent to tenants with pets or children. 11 In her evidence, Ms Taylor says that she was only made aware of Ms Murtagh and Mr Femsom's interest in her property in September 2003. Mr Barton had phoned Ms Taylor and forwarded a letter to her with suggested answers to questions being asked by the Anti-Discrimination Board. The letter, dated 17 September 2003, included the following: Q3. Did you provide instructions to Mr. Barton that he was to rent the property at 12 (sic) Normoyle Crescent Young to a qualify (sic) tenant with no children or pets? A. I advised Mrs. Elizabeth Barton (one principal of the Barton Agency) I required a good tenant with no children or pets as I had only purchased the house a year ago and recently repainted and recarpeted the house, I required good tenants with references. 12 Ms Taylor attests that she was concerned about this proposed response because at no time had she spoken to Elizabeth Barton about the lease of the property. She forwarded the correspondence to her solicitor. 13 Ms Taylor denied that she placed any restrictions on whether tenants should have children or pets. Her only requirements were that they be reliable tenants with suitable references. She gave evidence that she had other rental properties that were rented to families with children and also noted that, as her property had four bedrooms, it was most suitable for a family with children as it would be rather large for a family that did not have them. 14 Ms Taylor also provided affidavits from other agents with whom she had also listed her property. Three real estate agents – Anthony Slack-Smith, Janice Broderick and Kathy Brown – all attested that when Ms Taylor had approached them to list the property her instructions were that the tenants be reliable with good references and at no time did she mention a preference against families with children. 15 In a further letter to the Board, dated 15 October 2003, Mr Barton asserted that he had received verbal instructions through Ms Elizabeth Barton, his partner, from Ms Taylor's husband that the property was not to be rented to tenants with children or pets. 16 In subsequent correspondence with the Anti-Discrimination Board dated 12 February 2004, Mr Barton said that his sole reason for refusing to rent to Ms Murtagh and Mr Fensom was that he had managed their previous residence and that the landlord of that rental property was currently in dispute with them over outstanding rent. He included an order dated 11 August 2003 by the Consumer, Trader and Tenancy Tribunal against Ms Murtagh and Mr Fensom for rent owing and a bond. 17 Mr Barton conceded in his letter to the Anti-Discrimination Board dated 12 February 2004 that they had never informed Ms Taylor of Ms Murtagh and Mr Fensom's interest in her property because Mr Barton considered them to be unsuitable tenants. 18 On 18 June 2004, prior to the hearing, Mr Barton settled with Ms Murtagh and Mr Fensom. Ms Murtagh and Mr Fensom have proceeded with their claim that Ms Taylor is vicariously liable for the actions of Mr Barton. The Applicant's Claim 19 On 30 June 2003 Ms Murtagh and Mr Fensom lodged a complaint with the Anti-Discrimination Board. The applicant claimed that the actions of Mr Barton in refusing to take an application for Ms Taylor's property because they had children amounted to discrimination on the basis of age in the provision of accommodation and had therefore breached the Anti-Discrimination Act 1977. 20 Ms Murtagh and Mr Fensom claim that Ms Taylor is vicariously liable for Mr Barton's action. They assert that, even though there was nothing in Ms Taylor's behaviour that authorised the discrimination before she became aware of their complaint, her inactivity and indifference subsequent to the notification can be interpreted as authorising the conduct. They argue that she did nothing to make it clear that age discrimination was unacceptable, made no apology, gave no evidence of an investigation into the truthfulness of what happened and had not sought to discipline or educate the agent that such behaviour is unacceptable and intolerable. 21 Ms Murtagh and Mr Fensom accepted that Ms Taylor did not expressly authorise unlawful discrimination when she first placed her property with Mr Barton but claim that Ms Taylor's inaction after she learnt of the discrimination means that she could not rely on the defence that she took all reasonable steps to prevent the agent from breaching the Act. The Respondent's Claim 22 Ms Taylor claims that she at no time instructed Mr Barton not to rent her property to families with children. She had listed the property with three other agents and did not instruct any of them that the property not be listed with a family with children or pets. 23 She states that she did not authorise Mr Barton to discriminate on the basis of age by refusing to rent her property to a family with children. She claims that she was not aware of Ms Murtagh and Mr Fensom's interest in her property until September 2003 when the matter was already before the Anti-Discrimination Board. Age Discrimination 24 The agent, Mr Barton, was joined in the original application as a co-respondent. He subsequently settled with Ms Murtagh and Mr Fensom. However, it is not open to the Tribunal to infer any breach of the Anti-Discrimination Act 1977 from that settlement. The Tribunal must firstly determine whether the actions of Mr Barton amounted to discrimination on the basis of age. If so, the Tribunal must then decide whether Ms Taylor is vicariously liable for that discrimination. 25 Mr Barton noted in his correspondence with the Anti-Discrimination Board that he had told Ms Murtagh and Mr Fensom that they were not suitable tenants for Ms Taylor's property because they had children. He said this to Ms Murtagh in response to her inquiries on 6 May 2003, 4 June 2003 and 11 June 2003. Mr Barton's refusal to take an application from Ms Murtagh and Mr Fensom because they have children meant that their application was given a lower order of precedence and that lower order of preference amounted to discrimination on the basis of age as prohibited by s.49ZYA(1) of the Anti-Discrimination Act 1977: (1) A person ("the perpetrator") discriminates against another person ("the aggrieved person") on the ground of age if, on the ground of the aggrieved person's age or the age of a relative or associate of the aggrieved person, the perpetrator: (a) treats the aggrieved person less favourably than in the same circumstances, or in circumstances which are not materially different, the perpetrator treats or would treat a person who is not of that age or age group or who does not have such a relative or associate who is that age or age group, or (b) requires the aggrieved person to comply with a requirement or condition with which a substantially higher proportion of persons who are not of that age or age group, or who do not have such a relative or associate who is that age or age group, comply or are able to comply, being a requirement which is not reasonable having regard to the circumstances of the case and with which the aggrieved person does not or is not able to comply. 26 The refusal to rent the property to Ms Murtagh and Mr Fensom on the basis that they had children amounts to age discrimination in relation to the provision of accommodation and is prohibited by subsection s.49ZYO(1)(a) and subsection 49ZYO(1)(c) of the Anti-Discrimination Act 1977: (1) It is unlawful for a person, whether as principal or agent, to discriminate against another person on the ground of age: (a) by refusing the person's application for accommodation, or … (c) by deferring the other person's application for accommodation or according the other person a lower order of precedence in any list of applicants for that accommodation. 27 The Tribunal is satisfied, on the evidence before it, that the actions of Mr Barton breached the Anti-Discrimination Act 1977 and amounted to age discrimination in the provision of accommodation. Vicarious Liability 28 Section 53 of the Anti-Discrimination Act 1977 holds principals jointly and severally liable for actions undertaken by an agent. Section 53(1) states: An act done by a person as the agent or employee of the person's principal or employer which if done by the principal or employer would be a contravention of this Act is taken to have been done by the principal or employer also unless the principal or employer did not, either before or after the doing of the act, authorise the agent or employee, either expressly or by implication, to do the act. Issues 29 The issues for the Tribunal are as follows: 1. Did Ms Taylor, either before or after Mr Barton refused to provide the accommodation, authorise him either expressly or impliedly, to make that decision? 2. If so, did she nevertheless take "all reasonable steps" to prevent Mr Barton from contravening the Act? 30 Once it is established that misconduct has occurred and the agent, Mr Barton, was ostensibly at the time acting in the discharge of responsibilities for the principal, Ms Taylor, those actions were deemed to be done by Ms Taylor unless his conduct was unauthorised by Ms Taylor either expressly or by implication. Shellharbour Golf Course v Wheeler [1999] NSWSC 224 para. 33. 31 Vicarious liability has most frequently arises in the context of anti-discrimination cases when employers are found to be liable for the actions of their employees. Caton v Richmond Club Ltd [2003] NSWADT 202, Dee v Commissioner of Police and Anor (No.2) [2004] NSWADT 168, Shellharbour Golf Course v Wheeler [1999] NSWSC 224. However, vicarious liability also arises in relationships between a principal and their agent and that includes the relationship between a landlord and the real estate agent responsible for renting the property. The relationship between a landlord and a renting agent is a principal and agent relationship for the purpose of s.53 of the Anti-Discrimination Act 1977 and the relationship between Ms Taylor and Mr Barton falls into this category. 32 However, s.53(1) extends liability of the acts of the agent to the principal "unless the principal or employer did not, either before or after the doing of the act, authorise the agent or employee, either expressly or by implication, to do the act." (emphasis added) 33 The onus of establishing that the acts of an agent were not authorised falls on the principal, Ms Taylor. Section 109 states: Where by any provision of this Act or the regulations, conduct is excepted from conduct that is unlawful under this Act or the regulations or that is a contravention of this Act or the regulations, the onus of proving the exception in any inquiry lies upon the respondent. See also Samuels Real Estate v Lamb [1998] EOC ¶92-923. 34 In finding that Ms Taylor could be responsible for the discriminatory actions of her agent, Mr Barton, the Tribunal needs to consider whether she authorised his actions. 35 The meaning of "authorise" was considered by Justice Studdert in Shellharbour Golf Course v Wheeler[1999] NSWSC 224 at para. 58: Accordingly, it appears to me that for the purposes of s.53 the word "authorise" embraces "sanction, approve, countenance and permit." Permission may be inferred from inactivity and indifference where the person sought to be made liable is aware that some particular behaviour may occur. 36 Mr Barton admitted that he had said to Ms Murtagh and Mr Fensom that they were not suitable tenants because they had children. In his written submissions to the Anti-Discrimination Board he maintained that these were his instructions from Ms Taylor. Mr Barton was not available to the Tribunal to give evidence but from his correspondence contained within the President's Report and with Ms Taylor, it is clear that his account as to why he would not rent the property to Ms Murtagh and Mr Fensom changed when in his letter of 12 February 2004 he stated that the sole reason for the refusal was that he was aware of actions being taken against Ms Murtagh and Mr Fensom over back rent and the bond owing on another rental property. 37 Ms Taylor's evidence was consistent and backed up by the affidavits of other agents with whom she had listed the property and all gave evidence stating that, in listing the property, Ms Taylor's only directions were that tenants be reliable with good references. The Tribunal, in looking at the evidence before it and finding her evidence more credible because it was consistent with previous conduct whereas Mr Barton's evidence was inconsistent, came to the view that Ms Taylor did not direct Mr Barton to refuse to rent her property to families with children. 38 In making a determination of fact as to whether Ms Taylor authorised Mr Barton's actions, the Tribunal can consider the nature of their agent and principal relationship. In situations where the action is that of an employee, the employer has more ability to reprimand, investigate, caution, educate and train employees for whose actions they may be vicariously liable. The employer also has more ability to regulate the work environment to ensure that there is an ethos that respects the principals of non-discrimination. A principal has less ability to direct the day-to-day execution of a job undertaken by an agent and, in a situation like Ms Taylor's, has a limited ability to affect the environment of the agent's workplace and to undertake formal investigations of complaints and provide education and training. The strength of the nexus between the agent's ability to direct the agent and influence their workplaces is weaker than that of an employer's to direct and supervise an employee and influence the culture of the workplace, provide professional development and training and institute complaint and investigation mechanisms. This lessened nexus is not a defence but it is an aspect of the factual material in each particular case to consider when determining whether a principal has given authority to an agent. 39 In determining whether actions were authorised, it is also open to the Tribunal to consider the actions of a principal both before and after the breach of the act if this assists in drawing some conclusions. In Caton v Richmond Club Ltd [2003] NSWADT 202, the Tribunal noted at para. 143: Certainly, if at the time a formal complaint is made, it is the first time that the employer is made aware that potentially discriminatory, harassing or victimising behaviour has occurred, and the employer takes appropriate and immediate action in response including reasonable steps to prevent contravention of the Act, the employer is more likely to have met the requisite statutory standard to avoid vicariously liability. 40 In Ms Taylor's case, she was not made aware of Mr Barton's discriminatory actions until she was notified as part of the Anti-Discrimination Board's investigation. Ms Murtagh and Mr Fensom do not allege that Ms Taylor's behaviour before the discrimination should be seen as authorising the unlawful conduct of Mr Barton. They maintain that it was her failure to act after she became aware of Mr Barton's action. They assert that she could have done a variety of things to show, after the fact, that she did not authorise his actions. They suggest that she could have apologised, attempted to investigate the truthfulness of what had happened or sought to discipline or educate the Mr Barton that his behaviour was unacceptable and intolerable. 41 These remedies suggested by Ms Murtagh and Mr Fensom would be more easily undertaken by an employer seeking to show that they did not authorise the actions of an employee. Ms Taylor was not in a position to be able to undertake an investigation, could not have disciplined him or provided training for Mr Barton. Nor was she in a position to be able to regulate Mr Barton's workplace. These matters do not automatically relieve her of vicarious liability but they must be taken into account when considering what actions she could have taken to show that she did not authorise Mr Barton's behaviour. The Tribunal finds that in this particular case, Ms Taylor would have an expectation that Mr Barton would have acted legally. 42 Ms Taylor's position was complicated by the correspondence she received from Mr Barton where he suggested answers to her that she provide to the questions the Anti-Discrimination Board was asking as part of their inquiry. His suggested answers to Ms Taylor would have seen her say that she had directed the age discrimination. This was not the case and she sought independent legal advice upon receiving the letter from Mr Barton. 43 By the time Ms Taylor had found out about Mr Barton's conduct, the property had been rented. This does not sever her liability (see Y v V and X (EOD) [2003] NSWADTAP 44 where the Appeal Panel rejected the proposition that the operation of s.53(1) was dependant upon a continuing relationship) but it meant that she could not take the step of withdrawing it from being listed with Mr Barton. 44 In other circumstances, the actions of a principal after they are notified of a potential or actual breach of the Act may provide some mitigation or exacerbate vicarious liability. This is particularly so in a workplace environment where actions of discrimination, harassment or victimisation have occurred and, if left unchecked, are likely to occur again. It will also be relevant in considering the type of environment an employer is creating in a workplace. 45 Even if Ms Taylor's inaction had amounted to an authorisation of Mr Barton's action, there is evidence that, in the circumstances, she took all reasonable steps necessary to satisfy the defence in s.53(3). 46 Again, Ms Taylor only became aware of Mr Barton's behaviour after the Anti-Discrimination Board began investigating the complaint by Ms Murtagh and Mr Fensom. At that time, Ms Taylor received a letter from Mr Barton suggesting that she answer the questions of the Anti-Discrimination Board that would have clearly implicated her as responsible for issuing those directions. She found herself in a situation where she felt that she could not trust the agent and immediately sought legal advice. These circumstances curtailed her ability to independently investigate the alleged discrimination, to create an ethos in the work environment or to educate or train him. In this particular agent and principal relationship there is less ability to create an ethos or control an environment than in an employer and employee relationship. Once involved in legal proceedings, Ms Taylor may have been reluctant to give a response such as an apology or condemnation of the alleged discrimination. The Tribunal does not believe that it was reasonable for her, at that stage of the proceedings to have taken any such action. The action she took of seeking immediate legal advice was, in the Tribunal's view, sufficient. 47 Nor does the Tribunal think it is reasonable that before a principal gives their business to a real estate agent, they should have to specifically check that the agent follows codes of conduct that bind them to act lawfully, train their staff on how to act lawfully or specifically instruct the agent to follow anti-discrimination law (and indeed any other laws they are legally required to follow). In the Tribunal's view, unless there is specific evidence before the principal at the time of engaging the real estate agent that shows or implies to the principal that a particular agent does not, or will not, act lawfully, a principal should be able to presume that the real estate agent will at all times act lawfully on their behalf, in much the same way that one would assume that a solicitor engaged to act on one's behalf would act lawfully. A principal hires a real estate agent for the agent's expertise – this should include a presumption that the real estate agent acts within the laws that govern their profession. In this case, there was no evidence before Ms Taylor or the Tribunal that Mr Barton had a tendency to, or would on her behalf, act unlawfully. Conclusions 48 The Tribunal finds that Ms Taylor did not either expressly or impliedly authorise Mr Barton to refuse to provide accommodation to Ms Murtagh and Mr Fensom on the basis that they had children either before or after his actions. In the circumstances of this case, the Tribunal would also find that Ms Taylor took all reasonable steps to prevent Mr Barton from contravening the Act. 49 There are more and more people finding themselves in a situation where they make additional income from rental properties. Although Ms Taylor was able to avoid liability in this case, her experience is a timely reminder of the responsibility of landlords to ensure that their agents comply with the Anti-Discrimination Act 1977. None of the standard management contracts that were submitted by the agents Ms Taylor had approached contained provision that the agent be bound by the principles of anti-discrimination. The Property, Stock and Business Agents Regulation 2003, which only came into force in September 2003 now allows landlords to assume that agents are not likely to discriminate. Even so, given the rise in number of small property investors, the fact that their relationship with the person renting their property on their behalf attracts vicarious liability, should be cause for caution when selecting an agent and should be cause for standard management contracts to be amended to include a provision that assures the principal that the agent will at all times act lawfully. 50 Given the broad nature of s.53(1), Ms Murtagh and Mr Fensom's claims gave the opportunity for the investigation of the circumstances in which vicarious liability may arise in the agent and principal relationship. Section 88(1) of the Administrative Decisions Tribunal Act 1997 gives the Tribunal the power to make an order of costs but "only if it is satisfied that there are special circumstances warranting an award of costs." No such special circumstances exist in this case and given the public interest in ensuring test cases be brought to explore the parameters of anti-discrimination law, this is a case in which it would be inappropriate for the Tribunal to award costs.